Express Scripts 2014 Annual Report Download - page 87

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Express Scripts 2014 Annual Report
oftheplanandtomanagetheplan’sassetsinaliabilityframework.Thepreciseamountforwhichthebenefitobligationwillbe
settleddependsonfutureevents,includinginterestratesandthelifeexpectancyoftheplan’smembers.Theobligationis
estimatedusingactuarialassumptionsbasedonthecurrenteconomicenvironment.
SeeNote2-Fairvaluemeasurementsforadescriptionofthefairvaluehierarchy.InvestmentsclassifiedasLevel2
includeunitsheldincommoncollectivetrustfundsandmutualfunds,whicharevaluedbasedonthenetassetvalues(“NAV”)
reportedbythefunds’investmentmanagers,andashort-termfixedincomeinvestmentfundwhichisvaluedusingother
significantobservableinputssuchasquotedpricesforcomparablesecurities.InvestmentsclassifiedasLevel3includeunitsof
ahedgefundofferedthroughaprivateplacement.TheunitsarevaluedmonthlyusingaNAV.Thehedgefund’sNAVisbased
onthefairvalue(reportedNAVs)ofeachfund’sunderlyingfundinvestmentsandincludescashequivalents,andanyaccrued
payablesorreceivables.Boththehedgefundanditsunderlyinginvestmentsarepricedusingfairvaluepricingsourcesand
techniques.TheplanmayredeemitssharesquarterlyatthestatedNAVafteraoneyearlock-up.AsofDecember31,2014and
2013,thepensionplandoesnotholdanyinvestmentsclassifiedasLevel1.
Thefollowingtablesetsforththetargetallocationfor2015byassetclassandtheplanassetsatfairvalueat
December31,2014and2013bylevelwithinthefairvaluehierarchy:
($ in millions)
Asset Class
Target
Allocation
2015(1)
Percent of
Plan Assets at
December 31,
2014
Plan Assets at
December 31,
2014 Level 2 Level 3
Cashequivalents 2%2% $ 3.0 $3.0 $—
UnitedStatesequitysecurities 9%7%
UnitedStateslarge-cap 9.5 9.5 (2) —
UnitedStatessmall/mid-cap 1.8 1.8 (3) —
Internationalequitysecurities 10%12%18.3 18.3 —
Fixedincome 55%51%76.8 76.8 (4) —
Hedgefund(5) 20%23%34.4 — 34.4
Globalrealestate 4%5%6.9 6.9 —
Total 100% $ 150.7 $116.3 $34.4
($ in millions)
Asset Class
Percent of
Plan Assets at
December 31,
2013
Plan Assets at
December 31,
2013 Level 2 Level 3
Cashequivalents 2% $ 3.3 $3.3 $—
UnitedStatesequitysecurities 9%
UnitedStateslarge-cap 11.0 11.0 (2) —
UnitedStatessmall/mid-cap 4.7 4.7 (3) —
Internationalequitysecurities 15%27.9 27.9 —
Fixedincome 45%80.6 80.6 (4) —
Hedgefund(5) 24%42.9 — 42.9
Globalrealestate 5%9.0 9.0 —
Total 100% $ 179.4 $136.5 $42.9
(1) TheamountsdisclosedreflectourtargetallocationbasedonthefundedratiooftheplanatDecember31,2014,andare
subjecttochangebasedonthefundedratiooftheplanduringtheyear.
(2) ConsistsofcommoncollectivetruststhatinvestincommonstockofS&P500companiesandUnitedStateslarge-cap
commonstock.
(3) ConsistsofacommoncollectivetrustthatinvestsinUnitedStatesmid-capcommonstock.
(4) Primarilyconsistsofacommoncollectivetrustthatinvestsinpassivebondmarketindexlendingfundsandashort-term
investmentfund.
(5) Theinclusionofahedgefundservestofurtherdiversifythefundandthevolatilityofthehedgefundportfolioreturns
areexpectedtobelessthanthatofglobalequities.
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